State workers embrace lower-cost health plans

More than 30% of workers signed up for limited networks, saving $20m

Ninety-nine percent of active state employees have re-enrolled in health plans under an initiative state officials predict will save more than $20 million this year as more employees agree to enlist in plans with featuring limited networks of health care providers.

According to Group Insurance Commission Executive Director Dolores Mitchell, more than 30 percent of the 78,000 state employees signed up for the lower-cost limited network plans and just 691 – less than 1 percent – failed to reenroll automatically during a four-week open enrollment period.

“That is an astounding number, beyond our wildest expectations,” she said at a board meeting Thursday morning. “This number is just incredibly gratifying. It happened because everybody cooperated. People say government can’t do anything. To reenroll 78,000 people in four weeks is just astounding.”

As part of an effort to force state workers to reexamine their health insurance options, the state this year offered a three-month “premium holiday” to lure employees into choosing limited network plans. According to the administration, limited network plans offer “essentially” the same benefits as more expensive plans while limiting patients to seeing fewer care providers.

Mitchell said in a phone interview that “the real test” could be whether those employees who chose limited network plans retain them over time.

“Is it going to be the gift that keeps on giving?” she wondered. “It could be. People tend to stay in the plans that they’ve selected.”

Mitchell acknowledged that a similar move toward limited networks in the 1990s had backfired, when consumers rebelled against the notion of limited health care options. But she said she’s not certain the current move toward limited networks will lead to the same result.

“So much is going on in the health care world as well as in the economy that to say that history will repeat itself I’d say is maybe a bit of a stretch,” she said. “There’s no question that Americans value choice. But remember, we have six different carriers and within those carriers we have at least two different options.”

“Our hope,” she added, “is that this will also send a message to the higher-priced providers that it can’t be business as usual anymore. If we can lower prices, that’s a benefit to everybody.”

Mitchell also noted that a prominent concern with limited networks – that healthier people join them, leaving only sicker, costlier residents in plans with broader networks, driving up premiums – could play out within the GIC, but it’s too soon to tell.

“We don’t yet know the risk profile of the people who have left [the broad networks],” she said. “In all probability, it will have some effect … We’ll know in due course.”

During Thursday’s board meeting, staff presented the board with a report showing that the 350,000 people covered through the agency saw an increase in out-of-pocket expenses last fiscal year, largely the result of “the overall increase in health care.”

The report found members saw increases as a result of higher deductibles and “modest” co-pay increases approved by the board, and that members paid for about 9.2 percent of their total health care expenses.

The share of costs paid by individuals has decreased since it peaked at 9.9 percent in fiscal 2003, according to the study, however members are still paying higher dollar amounts as a result of soaring health care costs.

GIC staff indicated that members could be in line for a decrease in out-of-pocket expenses as a result of new rules slated to take effect July 1 prohibiting co-pays and other cost-sharing for “preventive” medical services, like regular doctor visits.

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The report showed about 1,000 families faced out-of-pocket expenses that exceeded $5,000 in fiscal 2010.

One unexpected increase in out-of-pocket expenses, according to the report, arose from an administrative change enacted about six years ago that resulted in health plans charging patients as many as eight co-pays in a single year for services related to a chronic illness, even though there is supposed to be a four co-pay-per-year maximum. Mitchell said she hoped to share the report with the Legislature.